Chicago Board of Trade Market News
Outlook: The basis for feed grains is stable in the U.S. Corn Belt and that price action implies that farmers are not racing to market more grain whenever there is a limited rebound in futures contracts. Patience in marketing seems to stem from a perception that global feed grain production will decline if market prices remain at current levels. One key reason that reduced corn acreage is likely this spring in the Black Sea region is because weaker domestic currencies will make input costs more expensive. As well, U.S. feed grain producers seem aware that global planting weather is seldom universally ideal. Thus, they see no reason to change their strategy of selling piecemeal.
Futures traders would like to assume that the soy complex has the same justifications for price stability that feed grains do, but that simply is not the case. South America is beginning to harvest a substantial soybean crop. In addition, U.S. soybean acreage is expected to increase this spring while corn acreage declines. The prospects of this acreage transition are particularly strong if soybean futures do no weaken in relation to corn for fall 2015. If prices do adjust by means of a sudden near-term setback in the soy complex, then more limited downward pressure on corn contracts could create a favorable buying opportunity for end-users of corn.
The initial stages of weather talk are just starting to emerge; and there was some discussion this week about potential dryness in the Western Plains of the United States. Uncertainty about moisture levels generally encourages the planted of soybeans more than corn. The topics of weather and prospective plantings will become increasingly active going into the month of March.